Procurement and Supply Chain of Coca Cola

Running Head: ANALYTICAL REPORT OF COCA-COLA COMPANY
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Analytical Report of Coca Cola Company
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Executive Summary
The purpose of this analytical report is to evaluate and present findings of the procurement and
supply chain of Coca Cola Company. After a critical analysis of the company’s process such as
supply, operations, information, and integration, recommendations were made on how various
programs such as ERP and RFI and can assist the company to achieve its mission, vision and
strategic objectives. The company also uses Supplier Guiding Principles to evaluate and assess
the suppliers. The company is also facing challenges such as competition, and healthy issues. It
is recommended that doing more research on diet-oriented product and enhancing distributions
channels will assist to overcome these challenges.

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Table of Contents
Executive Summary…….…………………………………………………………………………2
Introduction..............................................................................................................................
…...4Mission, Vision, Goals……....
…………………………………………………………………….4
Findings of Supply Analysis………………………………………………………………………5
Findings of Operational Analysis…………………………………………………………………7
Findings of Information Analysis…………………………………………………………………9
Findings of Integration Analysis…………………………………………………………………11
Findings of Sustainability Analysis……………………………………………………………...13
Supply Chain Analysis…………………………………………………………………………..14
Improvement Programs………………………………………………………………………….14
Conclusion………………………………………………………………………………………15
References………………………………………………………………………………………16

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Introduction
Coca-Cola operates in non-alcoholic beverage industry and has been making significant
progress over the years. The company which was founded I 1886 by John Stith is the largest
beverage company in the world. With operations in more than 200 countries, Coca-Cola is the
biggest supplier of soft drinks in the history led by Coca-Cola which is the most recognized
brand worldwide (Gertner & Rifkin, 2017). The company’s headquarter is in Atlanta but since it
is a large multinational company, it is divided into different units namely Eurasia, Europe, Latin
America, Middle East, Asia, North America, and Africa. The company focuses on expanding
their business and increasing the shareholders’ value while serving customers with consistency
and creativity. Despite operating in a highly competitive world market with key competitors like
Nestle, PepsiCo, Redbull, and Parlie, the company has managed to remain ahead of the game for
so many decades now (Foster, 2014).
Mission, Vision, and strategic goals
Coca-Cola has managed to be the leading beverage company in terms of market share and
revenue income due to its mission and vision statements. At Coca-Cola, they believe that they
need a need to look ahead to do well in business since the world is changing every day. The
mission statement of Coca-Cola is divided into three sections which states that the company aim
“To refresh the worlds mind, body and spirit. To create value and make a difference. To inspire
moments of optimism and happiness through our brands and actions”. The company’s vision is
“To be a place of work where people are motivated to be the best as they can be and to maximize
the long-term returns to shareholders which being mindful”. The primary goal of the company is

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to help people lead healthier lives by providing refreshing beverages for all occasions and
lifestyles (Pereira, 2010).
Findings of supply analyses
Key product analysis
Led by the favorite Coca-Cola brand, the company offers more than 3000 beverage
brands all over the world. Key brands which are mostly consumed are Fanta, Sprite, Coke, fruit
juice, Minute Maid, and Powerade. These beverages are packaged in plastic or aluminum bottles
which are available in sizes of 300ml, 600 ml, 1.25, and 2 litres (Cucchiella & Koh, 2012).
Key product suppliers
Coca Cola has many suppliers who support business operations. Coca-Cola suppliers are
also business partners who supply the company with ingredients, materials, machinery, and
bottles. For large companies like Coca Cola procurement can be a bit costly. However,
outsourcing can also be an advantage, especially where they can make use of economies of scale
and hire experienced staff. As Coca-Cola continues to dominate the world market, it is
continuing to get the upper hand with the key suppliers and they believe that with its supply
chain in place, they believe that they are going to continue to be leaders in manufacturing,
retailing, and marketing of non-alcoholic beverages (Mokhov & Ryabukhin, 2018). As earlier
mentioned, Coca Cola is a large global company which operates in local communities where
they do business in regional scales. Outsourcing is the best strategy which works for Coca Cola
due to its size and diversity. Using the company’s HBC procurement system Coca Cola divides
its supply base 43,000 suppliers into two segments. Those who supply directly and those who do

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so indirectly. Agricultural ingredients are outsourced from multinational suppliers in various
countries including Hungary, Florida, Brazil, and Greece. Principal raw materials like sweeteners
are purchased from United States. The table below shows the major suppliers of Coca-Cola
Company (Foster, 2014).
SUPPLIER HEADGUARTER PRODUCTS &
SERVICES
Kraton Corp Texas, USA Biobased chemicals
and polymers
Crown holdings Pennsylvania,USA Beverage and food
cans
Pepsico Inc New York Food and beverage
Company
Eastman chemical co Tennessee, United
States
Additives, chemicals,,
and fibers
Omega protein Corp Texas, USA Dietary supplements
and animal feeds
Kralijic matrix is a tool used to analyze the purchasing strategies of a company. The tool
segments and prioritizes suppliers spending category by strengthening supply security while
reducing costs. At Coca-Cola, a Supplier Management Relationship process was invented
whereby the supplier risks and costs would be assessed. Supplier risks are rated using 13 factors
while potentials are assessed using 12 factors. The commodity which suppliers provide is the
factor used to analyze the suppliers' strength (Matthews et al., 2015).

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Supplier selection and evaluation
Coca Cola expects all its suppliers to abide by all suppliers guiding principles. They are
supposed to conduct business in an ethical manner following all laws and policies in all regions
that the company does business. To ensure compliance with the suppliers, Coca-Cola has set
Supplier Guiding Principles which covers areas such as bribery, child abuse, cartel activities, and
health. At Coca-Cola, employees are evaluated according to Supplier Guiding Principles.
Additionally, the company offers training and assistance programs to ensure that they improve
their areas of operations (Jaiswal, & Kaushik, 2005).
Supply-related challenges
Coca Cola is experiencing a few difficulties due to digitalization, outsourcing, resource scarcity,
and needs of local customers. For example, by introducing plastic bottles, the company
diversified their products to meet the needs of their customers better (Cucchiella & Koh, 2012).
Findings of operations analyses
According to a report by the business insider, more than 94% of world’s population is
aware of Coca-Cola brand. The company which operates in more than 200 countries worldwide
generates about 60% of its revenue from outside of United States. Market segmentation is the
main factor for Coca Cola success (Gertner & Rifkin, 2017). To Coca Cola, everyone is a
potential customer and they segment their products according to the countries and regions.
Although no specific customer is targeted, segmentation focuses on the youths who are below 35
years. Segmentation is also done according to the income and family size. Outsourcing is another
operation that has helped Coca-Cola to expand very fast. Coca-Cola has outsourced bottling

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operations to FEMSA which has assisted the company in capturing growth opportunities in
upcoming global markets especially in Africa and Asia. Coca-Cola products are sold in
supermarkets, restaurants, shops, and other outlets worldwide. As shown in the chart below, it is
clear that the highest percentage of the company’s revenue comes from North America, followed
by Latin America, and Pacific (Mokhov & Ryabukhin, 2018).
Forecasting techniques
Coca-Cola uses forecast system and JDA software to integrate supply and demand effectively.
These systems can offer information about all the items in the inventory. Using these systems,

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the company can track the inventory that is received, and where the stock is going. For Coca-
Cola which is a big company, it is crucial to ensure the inventory management systems are in
place to avoid losses (Cassivi, 2006). It can be said that the company’s inventory forecasting is in
place because they are in accordance with the standards stated in Collaborative Planning,
Forecasting, and Replenishment (CPFR).
Inventory management
Coca Cola continues to review their inventory management systems to ensure that they
are up to date and useful. Due to different segmentations, the company uses various methods to
manage their inventory. For instance, the company adopted an Advanced Inventory Management
(AIM) solution in Swaziland and Nigeria to enhance flexibility in warehouses. AIM speeds up
supply chain responsiveness and makes warehouse operations faster and efficient. Using modern
technology devices such as radio frequency systems, inventory management in the warehouses
become more sophisticated (Pereira, 2010).
Demand & Inventory Management Challenges
For a large company, managing inventory in different countries has been a challenge.
Aligning their various strategies with constant priorities is not easy especially when different
entities do production and packaging. However, to ensure that the process is well streamlined,
the company managed to Coca-Cola Enterprises, which was the company’s largest bottler in
North America. Coke uses Genesys program to ensure visibility and transparency into the
business to thus improving decision making (Padmanabhan, Lee & Whang, 2015).
Findings of informational analyses

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Bullwhip effect
The purpose of a supply chain is to maintain the balance between production and customer
demand in the market (Pagell & Wu, 2009). However, sometimes keeping this balance may
prove to be challenging especially for multinational corporations which have a large customer
base. For complex networks such as those of Coca Cola, bullwhip effect can occur anytime in the
production process costing the company significant loss. To cope with this challenge, Coca Cola
uses a system called Black Book. Coca Cola uses this system for its Minute maid and Orange
brands to ensure that there is consistency when blending batches of orange. The system gives the
information required using algorithms by considering factors such as prevailing market cost,
weather, and crop yield. Using this information, the company can plan its supplies for
approximately 15 months ahead (Mokhov & Ryabukhin, 2018).
Key Information-Technology Tools
To maintain a lean and transparent supply chain, Coca Cola uses various integrated
technological systems. The Radio Frequency Identification technology is used to assess goods
coming or going out of the warehouses. ERP, SAP R/3, and IBM are some of the techniques that
are commonly used at Coca Cola. ERP is integrated with other systems to make information
more visible to suppliers about the estimated quantity they are supposed to supply. Moreover, 3
M technology is used to manage the warehouse processes (Kamariah & Mohamed, 2009).
Collaborative practices
Coca-Cola collaborates with WWF to provide sustainable agriculture. Basically, the purpose of
this collaboration is to conserve clean water and enhance better performance for targeted

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agricultural products such as sugarcane, citrus fruit, pineapples, and oranges. The company has
also partnered with H.J. Heinz Company to produce ketchup bottles using Plant Bottle
technology which is an invention by Coca Cola Company. Moreover, the company participates
in AIM PROGRESS which is a joint training initiative focusing on mutual recognition and
business integrity (Matthews et al., 2015).
Findings of integration analysis
Map of supply chain
Coca Cola is a brand that is probably known in the whole universe must be having the most
complex supply chain. One would wonder how such a vast operation is handled to ensure that
the product reaches the consumers at the right time. Well, it is interesting to know that the drinks

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get to the consumers within 48 hours. The process starts from the factory store whereby most of
the more than 90% of the beverages are made in the host countries. Once the drinks are produced
and packed, they are delivered to stores using trucks. The company also must ensure that the
drinks are refrigerated once they reach their destination (Pelton et al., 2010).
Triple As of supply chain
The supply chain in Coke can also be analyzed using Lees Triple As model
Agility
Although many people in the world love Coca Cola products, the company continues to surprise
their customers with new and different products through innovation every time. Innovations start
in local markets and spread to other markets, for example, the Pulpy Orange drink which began
in China. Another significant innovation is Micro-Distribution Center (MDC) which started in
Africa (Pagell & Wu, 2009).
Adaptability
This involves real-time integration. Using systems such as ERP and RFI made information
visible to suppliers which ensure real-time integration among suppliers. Segmentation also is
crucial in this case.
Alignment
Coca Cola is embracing the idea of collaborating and partnering with key supply chain partners.
The company is extending its operations to other global markets; this means that the company’s

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revenue will continue rising. The suppliers who get high revenues from the company will have to
collaborate with Coke lest they lose their business with the company (Matthews et al., 2015).
Findings of sustainability analyses
According to Benomar (2018), sustainability is an issue that affects the supply chain of an
organization in terms of environment, waste, and risks. Pagell and Wu (2009) studied a Bundle
model which has been used to evaluate sustainability of a supply chain. At Coca Cola,
innovation plays a vital role in sustaining their purchasing and other operations. For instance,
through innovation, the company was able to reduce carbon in their packaging which is a threat
to the company. Sourcing ingredients such as water and fruits makes the company’s operations
more sustainable. Partnering with suppliers and working with other companies in the industry is
also a significant factor that has assisted Coca-Cola to achieve success for more than two
decades now (Benomar, 2018).
Supply chain analyses
Coca-Cola has one of the most extensive supply chain systems in the world. First, the
ingredient used by the company to manufacture the syrup is held as a secret, so no one has the
exact information about the company’s supplies. Based on Dynamic-Alignment-Model by
Gattorna, the company operates under a culture of change and growth (Gattorna et al., 2006).
Operating in more than 200 means that the company’s success in one country does not
necessarily mean that the whole company has succeeded. This means that each company
operates differently in the state where the company is doing business (Langella, 2017).

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In leadership, the company focuses on training and empowering employees to create a
culture of teamwork. Through teamwork, people can achieve more which helps the company to
achieve its goals, mission, and vision. Collaboration with key suppliers is also highly practiced
at Coca-Cola whereby suppliers are seen as business partners. Suppliers are also trained to
ensure that they improve where need be. Collaboration builds long-term relationships and trust
with suppliers (Klumpp, 2018).
Improvement programs
It is without doubt that Coca Cola brand has reached all corners of the world. With more than
90% of world population having information about what the company offers, it is clear that the
company already has a huge customer base (Reimann & Ketchen, 2017). However, in terms of
distribution, the company should ensure that their customers get their products more often. This
can achieved by the distributors working closely with customers mainly restaurants, shops,
vendors, and grocery among others. Another significant threat to Coca-Cola is the issue of health
whereby many people are suffering from obesity perhaps because of carbonated beverages. Coca
Cola is known to produce carbonated drinks which contain fat intakes. People nowadays are
aware of their health and fitness and they prefer drinks that will not make them obese. Therefore
to mitigate this risk should invest and do more research to develop diet-oriented beverages. It is
also appropriate to sponsor diet oriented programs in school to reassure young people who are
the primary target market and gain their trust back. Moreover, competition from Pepsi and
indirect competition from coffee chains is a threat to the company. Globalization has increased
competition from other companies which are entering the global market with different products.
To overcome this, Coca-Cola needs to be more creative so that they can come up with new
products that will keep their customers interested in what they offer (Reimann & Ketchen, 2017).

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Conclusion
Having more than 3000 products in 200 countries in the universe, Coca-Cola has surely
succeeded in dominating the global market. Being a huge company, Coca-Cola has one of the
largest supply chain systems worldwide. Although the company is a pacesetter in developing a
successful supply chain, some challenges ought to be addressed. Addressing the issue of health
and enhancing the distribution methods will be helpful. On the other hand, the company’s
collaboration with customers and suppliers, and use of modern technology has enabled the
company to achieve their vision, mission, and strategic goals so far.

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